Aetna CEO Set to Reap About $500M If CVS Deal Closes • Hacker News Board

Re: Aetna CEO Set to Reap About $500M If CVS Deal Closes

#61

Post by ethagknight » Tue, Dec 05, 2017, 6:05 PM UTC

It helps to understand the breakdown of how he got to this level of benefit. My guess: it doesn't sound like he just gets a $0.5B payout at close, but instead its the value of his Aetna holdings after close + his termination contract. To break it down, say he gets option for 300,000 shares at $30/share ($9mm) each year over the last 7 yrs, and the company stock price has gone from $30 to $207 per share, with steep ramp in price at the end of his reign, he is left with 2.1mm shares worth $177 more per share than he paid for them, netting him $370,000,000. His change in control contract is worth $85mm, bringing him to $450mm. Right or wrong, it makes more sense when broken down.

Disclaimer: I know very little about whats normal in stock options and executive pay, but a $10mm/yr salary for a man serving as CEO and chairman of a $70B company doesn't seem as far fetched as the $500mm total comp makes it sound

Re: Aetna CEO Set to Reap About $500M If CVS Deal Closes

#62

Post by mudil » Tue, Dec 05, 2017, 6:05 PM UTC

nathantotten wrote: post #11

mudil wrote: post #3

Earlier quoted context omitted.

Republican tax cuts are targeting small businesses and the middle class. Nice try

I know this is off topic from this thread, but I’m honestly curious as to why you think this. What evidence exists to support your statement? Normally, I would just assume this type of comment is simply trolling, but I looked at your profile and it seems you are a real person with generally intelligent comments so now I’m curious.

I didn't read the budget, and likely you didn't read it too. We can't do all things at the same time, so we have experts to take care of things. (Say, you get a CT scan, you are not going to view it and interpret it, your radiologist will.) The same with the budget: I trust the president and the Republicans, as I take their word for it.

Re: Aetna CEO Set to Reap About $500M If CVS Deal Closes

#63

Post by maxerickson » Tue, Dec 05, 2017, 6:05 PM UTC

yequalsx wrote: post #9

Whatever your politics that $500 million comes from profit in healthcare. Aetna has an economic incentive to denvy as much care as they can. That $500 million to one person is part of the overall cost of healthcare in the U.S. Is this really money well spent on healthcare?

Sort of. It's clearly stated that some of it is from growth in the value of stock that he has been compensated with, that value (the growth of the stock) isn't literal profit from healthcare, it's market pricing of the future ability of Aetna to profit on healthcare.

And then there is some reason to consider how much delivered value the profit is associated with. If patients reaped similarly large amounts of value from the care they received, the profit isn't necessarily problematic.

Re: Aetna CEO Set to Reap About $500M If CVS Deal Closes

#64

Post by peg_leg » Tue, Dec 05, 2017, 6:05 PM UTC

For 10% of that he can buy enough of congress to make that happen

Re: Aetna CEO Set to Reap About $500M If CVS Deal Closes

#65

Post by sverhagen » Tue, Dec 05, 2017, 6:06 PM UTC

lefstathiou wrote: post #49

chasing wrote: post #13

Earlier quoted context omitted.

Yes it does. Aetna employees almost 50,000 people. Aetna owes some success to their CEO. They owe most of their success to their employees.

I respectfully disagree with the way you are positioning this. The relative impact of a CEO, whose job is to set strategic direction and direct human (tens of thousands of employees) and financial capital (billions of dollars) at scale, dwarfs that of any of its individual employees and the vast swath of them combined. Most relevant to you, the majority of the benefit of this 7x increase in value in 7 years is actual…

I don't think anyone is arguing that he has a more than average impact on the direction of the company. But, like any humble CEO would say, it's all about the people, the people below them, the people throughout the organization. So, while he deserves a decent bonus, fine, why does it need to be roughly thirty-three thousand times minimum wage. And this is just the bonus, he probably still has a very happy salary as well.

Re: Aetna CEO Set to Reap About $500M If CVS Deal Closes

#66

Post by bfuller » Tue, Dec 05, 2017, 6:07 PM UTC

chasing wrote: post #13

ryanwaggoner wrote: post #7

Well, he led the company while its value went from $10 billion to $69 billion in 7 years. Doesn't seem ridiculous.

Yes it does. Aetna employees almost 50,000 people. Aetna owes some success to their CEO. They owe most of their success to their employees.

I am just curious how the system should work then?

Re: Aetna CEO Set to Reap About $500M If CVS Deal Closes

#67

Post by rukittenme » Tue, Dec 05, 2017, 6:07 PM UTC

ceejayoz wrote: post #25

Spivak wrote: post #18

Earlier quoted context omitted.

Just like every insurance company? Part of that is from the value of his stock increasing but nonetheless even if it was all from the exit why not if they think they got value for their money?

> Just like every insurance company? Yes, which is why insurance for something that's non-optional - health - is so sucky, and sucky enough that the rest of the developed world has decided to largely cut out the middleman.

This is wrong. Most countries still have the "middleman". The NHS is the only European system (that I know of) that is completely government operated. Germany, France, Switzerland all leverage private and public health insurance plans.

Furthermore, we can look at our own country (the US) and see how the different European systems play out. The VA (NHS-like) is a poorly run mess. Medicare (like Switzerland) runs decently.

Re: Aetna CEO Set to Reap About $500M If CVS Deal Closes

#68

Post by pg314 » Tue, Dec 05, 2017, 6:07 PM UTC

bkanber wrote: post #36

chasing wrote: post #13

Earlier quoted context omitted.

Yes it does. Aetna employees almost 50,000 people. Aetna owes some success to their CEO. They owe most of their success to their employees.

I'm all for taxing the rich and compensating workers fairly. But: - Had the company declined, the CEO would have gotten all the blame and been crucified. Can't give blame if you can't also give credit. - The CEO negotiated this deal, the employees did not. - A good portion of this $500M is from the value of his stock, which is part of his compensation. I don't know the percentage of this payout that comes from stock…

> - Had the company declined, the CEO would have gotten all the blame and been crucified. Can't give blame if you can't also give credit.

He was making 10+ million dollars a year already [1], which he would have been able to keep. The worst that could have happened to him if he was underperforming was being fired. Calling it being crucified is ridiculous hyperbole.

[1] https://en.wikipedia.org/wiki/Mark_Bertolini

Re: Aetna CEO Set to Reap About $500M If CVS Deal Closes

#69

Post by bfuller » Tue, Dec 05, 2017, 6:08 PM UTC

Kyragem wrote: post #15

Oligarchy at its best: Aetna/CVS workers mostly making minimum wage and doing all the work while the CEOs earning insane paychecks. Would this guy really be worse off if he only made 50M and the other 450M would go to the employees?

So the workers should be paid less if the companies profits fall?

edit: feel free to join the conversation silent downvoting cowards

Re: Aetna CEO Set to Reap About $500M If CVS Deal Closes

#70

Post by maxerickson » Tue, Dec 05, 2017, 6:08 PM UTC

Nrsolis wrote: post #57

bkanber wrote: post #36

Earlier quoted context omitted.

I'm all for taxing the rich and compensating workers fairly. But: - Had the company declined, the CEO would have gotten all the blame and been crucified. Can't give blame if you can't also give credit. - The CEO negotiated this deal, the employees did not. - A good portion of this $500M is from the value of his stock, which is part of his compensation. I don't know the percentage of this payout that comes from stock…

Something I find curious is the degree to which HN seems to want to break out the torches and pitchforks when a CEO profits handsomely by increasing shareholder value. There doesn't seem to be the same animus towards ordinary developers becoming millionaires in a few short years by getting lucky and landing at the right unicorn startup pre-IPO. CEOs interests are aligned perfectly in this situation: increase sharehol…

I'm not particularly animated by the issue but I'm also not convinced the compensation has much to do with relative ability and performance. It's based on lucky positioning and risk averse ass covering (the board thinks it is more defensible to pay lots for a star than take a risk paying less).